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Oi: Notice to Shareholders

Opening of the Term for the Voluntary Exchange of Preferred Shares into Common Shares and Commencement of Offer to Exchange Preferred ADSs for Common ADSs

RIO DE JANEIRO, Sept. 2, 2015

RIO DE JANEIRO, Sept. 2, 2015 /PRNewswire/ -- We inform our shareholders and the market in general that at the Extraordinary General Shareholders' Meeting of Oi S.A. ("Oi" or the "Company") held on September 1, 2015 (the "Meeting") the proposal to offer to convert preferred shares into common shares was approved, at a ratio of 0.9211 common shares for each preferred share issued by Oi, pursuant to paragraph 2º of art. 5º of the Company's Bylaws approved at the Meeting (the "Voluntary Conversion"). The implementation of the Voluntary Conversion is subject to participation of the holders of at least two thirds of preferred shares issued by the Company, excluding treasury shares (the "Conversion Condition").

Therefore, a period of thirty (30) days ending on October 1, 2015 has commenced (the "Conversion Period") during which each holder of preferred shares may, if they so desire, request the conversion of preferred shares that it holds into common shares at a ratio of 0.9211 common shares for each preferred share held.

Holders of American Depositary Shares, each representing one preferred share (the "Preferred ADSs"), may participate in the Voluntary Conversion by means of an offer to exchange Preferred ADSs for American Depositary Shares, each representing one common share (the "Common ADSs"), at a ratio of 0.9211 Common ADSs for each Preferred ADS (the "Offer to Exchange"). The Offer to Exchange will commence on this date and is scheduled to expire at 5:00 p.m., New York City time (6:00 p.m. Rio de Janeiro time), on October 1, 2015. Itaú Unibanco S.A., as custodian of Oi's Preferred ADSs, will give the instruction to convert to BM&FBOVESPA S.A. Securities, Commodities and Futures Exchange ("BM&FBovespa") on October 5, 2015, after all necessary steps have been taken to verify the total participation in the Offer to Exchange.

Procedures for the Voluntary Conversion:

(i) the shareholders of preferred shares deposited with the BM&FBovespa that want to convert their preferred shares into common shares shall, during the Conversion Period, contact their custody agents, with sufficient advance notice to take the necessary steps for the conversion of their shares, and request the transfer of preferred shares they want to convert to a specific portfolio established by BM&FBovespa (the "Conversion Portfolio"), subject to the rules and operating procedures of BM&FBovespa; and,

(ii) the holders of preferred shares registered at Banco do Brasil S.A., the depositary institution of the Company's shares ("Banco do Brasil"), that wish to convert their preferred shares into common shares, shall, during the Conversion Period, appear in one of the Brazilian branches of Banco do Brasil and sign the application form for conversion available in branches, and must submit the following documents: (1) Individuals: Identity Card, the Individual Brazilian Taxpayer's Registry (CPF), proof of address and proof of income; (2) Legal entities: original and copy of its Bylaws and the minutes of the election of the current management or the consolidated current articles of incorporation, registration card in the National Register of Legal Entities (CNPJ), corporate documentation granting powers of representation, and originals of the Identity Card, the Individual Brazilian Taxpayer's Registry (CPF) and proof of residence of its representative.

In case of shareholders holding positions in the Securities Lending Service (Serviço...